Understanding how cash is spent is very important for the effective operation of any business. Yet, businesses still lack clear visibility into spend. This lack of visibility is usually caused by disparate systems across the world, employees spending outside of hard-to-use systems, and spend occurring in different languages or currencies.
Once you take the time to complete a full analysis of your spend data (Accounts Payable, Purchase Orders) the next step is to see what you can do with all that information. By making a complete analysis of all your data, your organisation can generate multiple different savings opportunities.
Knowing what and from whom purchases are made is vital for spend analysis, but also knowing who inside the organisation made that purchase can be just as valuable. Personalised rules built on top of spend data can help track buyer and supplier habits, helping to identify and prevent non-compliant and dishonest purchasing.
Many organisations say they want to be ‘data-driven’, yet only a few are actually successful in turning analytics into action. It’s important to recognise the difference between insights and actionable insights. We can all gain insights from the data we collect, but if they only cause us to ask more questions, or lead us to a dead end, there’s little business value. Actionable insights are incredibly valuable and can be the difference between making progress or stagnating.
As Techopedia explains: “once there is enough insight that a proper course of action can be made from it, then this result is considered as an actionable insight.” Insights that make business leaders rethink an idea or push them into a new direction are particularly valuable.
Key Attributes of an Actionable Insight
- Adjustment – you are far more likely to drive action within a business when insights have been closely tied to existing business goals and strategies
- Background – understanding why an insight is important or unique gives you more of a chance to succeed. Without the proper context, an insight can end up raising more queries than actions.
- Applicability – insights need to be directed to the right person or decision maker to avoid not getting the consideration they need. It needs to be delivered at the right time and to the right person.
- Precision – an insight should be specific and complete so that it can be easily acted on. If an insight does not help to explain why something happened, it’s not yet something that can be used.
- Innovation – novel insights will have advantages over more familiar insights. Curiosity is something that can drive people to test or check for an unusual finding hoping to find something new and exciting on a key subject area.
- Communication – understanding an insight and how can it help you is very important. If people don’t understand how an insight is important and why, the insight will be overlooked and forgotten.
The more your insights line up with these attributes, the more actionable they will be for your business, no matter their source – machine or humans.
Steps to turn spend data into actionable insights
- Integrating analytics into business systems
- Measuring and optimisation
- Understand the context of the spend data
Whether your aim is to reduce risk, increase savings or improve capital, it is necessary to develop a clear, practical strategy for your spend data. You need to have in mind a plan and then follow through with a structured execution in order to turn your data analysis into real change.
If you want to know more on how to transform your spend data into actionable insights and how to increase profitability through better use of your spend data, let’s have a chat!